9911796707
TMI Blog1970 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the 31st March, 1957, and the 31st March, 1958. The material facts bearing on this reference are as follows: The assessee was previously the ruler of a Native State called the Banaras State. On 5th September, 1949, there was an agreement between the Governor-General of India and the assessee. India at that time enjoyed dominion status under the British Crown. Article I of that agreement, extracts from which have been annexed to the statement of the case as annexure " A ", runs as follows: " The Maharaja of Banaras hereby cedes to the Dominion Government full and exclusive authority jurisdiction and powers for and in relation to the governance of the State and agrees to transfer the administration of the State to the Dominion Governme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee. There is no dispute that the agreement of merger is binding on both the parties. The above agreement dated 5th September, 1949, was followed by a letter written by the said Sri V. P. Menon to the assessee conveying certain assurances on behalf of the Government of India. Paragraph 3 of this letter runs as follows : " 3. The gaddi of the Maharaja shall continue at Fort Ramnagar and the Fort and its appurtenances and Your Highness' private palace known as Nandeswar Palace shall not be liable to attachment or sale and shall descend to the successors of your Highness. This will continue as hitherto to be exempt from all property or other municipal taxation." After the Wealth-tax Act was introduced in 1957, the Wealth-tax Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed out that according to paragraph 3 of that letter the assessee would continue as hitherto, to be exempt from " all property or other municipal taxation. " It was urged that the wealth-tax is a tax on property and it was, therefore, covered by paragraph 3 of the aforesaid letter. It was also contended that, at all events, the words " other municipal taxation " in paragraph 3 of the letter should be construed by the rule of ejusdem generis. On this construction the explanation covers wealth-tax payable on property. There was another argument based on articles 291 and 362 of the Constitution. It was contended that these articles purport to preserve the personal rights and privileges and dignities of a ruler of an Indian State and the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment years 1957-58 and 1958-59 ?" A similar matter came up for consideration of a Full Bench of this court in the case of Commissioner of Income-tax v. Nawab of Rampur. The facts in that case were that the Nawab of Rampur was the ruler of the former State of Rampur. Since 1944, the Rampur Income-tax Act, 1944, was in force in that State, and under section 3A of that Act, the Act was not to apply to the Nawab. By an agreement between the Governor-General of the Dominion of India and the Nawab of Rampur, the Nawab of Rampur ceded to the Dominion Government full and exclusive authority, jurisdiction and powers for and in relation to the governance of the State and reciprocally the Dominion Government agreed that the Nawab shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt from taxation. Following the decision of the Full Bench, we hold that the terms of the agreement of merger, read with the letter of assurance, cannot be regarded as law in force either by the Tribunal or by this court. So far as the taxability of an asset under the Act is concerned, only such exemptions could be allowed as have been mentioned in section 5 of the Act. It has been already seen that under section 5(1)(iii), the ruler of an Indian State is entitled to exemption from taxation in respect of only one building which the Central Government has declared as his official residence under paragraph 13 of the Merged States (Taxation Concessions) Order, 1949. The Wealth-tax Officer has already allowed such exemption. The assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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